Tag: The Organization of the Petroleum Exporting Countries (OPEC)

Global Oil Stocks to Build in 2018

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


OPEC released its Monthly Oil Market Report (MOMR) for January, and its projections for 2018 imply a 29 million barrel global stock build, in contrast to 140 million barrel draw it estimated for 2017. As a result, it will not clear the glut, which OPEC estimates to be at 133 million barrels, at the end of November, based on the “latest five-year average.”

In 2017, OPEC production averaged about 32.5 million barrels per day (mbd), adjusting for the change in OPEC membership (i.e., with Indonesia’s 740,000 b/d).

global oil inventory 2017

In 2018, I have assumed OPEC production averages 33.2 mmbd, which is OPEC’s forecast (December) of its 2018 production. However, OPEC production averaged 32.416 mmbd in December.

global oil inventory 2018

OPEC projections imply that global stocks will build much more quickly in the first half of 2018 than they did during the same period in 2017. And the stock draws in the second half of 2018 are expected to be smaller than they were in 2017. Continue reading "Global Oil Stocks to Build in 2018" →

Why $80 Crude Oil Is Highly Unlikely In 2018

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


On January 2, 2018, Byron R. Wien, Vice Chairman in the Private Wealth Solutions group at Blackstone, issued his list of Ten Surprises for 2018. “Byron defines a “surprise” as an event that the average investor would only assign a one out of three chance of taking place but which Byron believes is “probable,” having a better than 50% likelihood of happening.”

Byron’s Ten Surprises for 2018 includes

“The price of West Texas Intermediate Crude moves above $80. The price rises because of continued world growth and unexpected demand from developing markets, together with disappointing hydraulic fracking production, diminished inventories, OPEC discipline and only modest production increases from Russia, Nigeria, Venezuela, Iraq, and Iran.” Continue reading "Why $80 Crude Oil Is Highly Unlikely In 2018" →

U.S. Production And Oil Inventories Expected to Rise in 1Q18

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


According to the Energy Information Administration (EIA), U.S. petroleum inventories (excluding SPR) fell by 14.2 million barrels in the week ending December 15, 2017. They stand about 2 million barrels (mmb) higher than the rising, rolling 5-year average and are about 96 mmb lower than a year ago.

Total U.S. Oil Stocks

Commercial crude stocks fell by 6.5 mmb, and SPR stocks were built by 0.4 mmb last week. Gasoline stocks rose by 1.2 mmb, and distillate stocks gained 0.8 mmb. Primary demand rose by 640,000 b/d to average 19.948 million barrels per day (mmbd).

Crude Production

The EIA estimated (using its model, click here for presentation) that U.S. crude production rose by 9,000 barrels per day to 9.789 mmbd, the highest week in EIA’s database. Production averaged 9.740 mmbd over the past four weeks, up 11.4% v. a year ago. In the year-to-date, crude production averaged 9.313 mmbd, up 6.3% v. last year. Continue reading "U.S. Production And Oil Inventories Expected to Rise in 1Q18" →

Why Oil Prices May Have Peaked

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


Why Oil Prices May Have Peaked

Crude oil futures peaked about a week before the OPEC meeting just below $59/bbl. Prices had been in an uptrend since October 6th, just before Hurricane Nate disrupted production in the Gulf of Mexico. There had also been indications by the White House that President Trump would soon deliver a speech explaining why he would not certify Iran’s compliance with the terms of the nuclear sanctions agreement. As a result, oil prices first rose as a result of the hurricane, followed by a risk premium due to the stand-off with Iran and expected extension for of the OPEC/non-OPEC deals through 2018.

NYMEX Crude Oil Prices

Given the OPEC announcement on November 30th, which means that the deals are baked-into crude futures for 2018, the question is, where should prices go? Based on the factors below, I expect prices to trade lower. Continue reading "Why Oil Prices May Have Peaked" →

OPEC Appeases Russia To Stick With Deals

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


The 173rd OPEC Meeting and 3rd non-OPEC Ministerial Meeting concluded with an agreement to extend the production cuts all the way through 2018. Saudi minister Khalid Al-Falih also implied that production in 2018 by Nigeria and Libya would not increase, based on information from those countries. In 2017, large increases by the pair undermined cuts made by others.

The official OPEC press release included two caveats, though not unusual but were obviously a concession to Russia, that the deals could be modified, depending on market conditions:

"In view of the uncertainties associated mainly with supply and, to some extent, demand growth it is intended that in June 2018, the opportunity of further adjustment actions will be considered based on prevailing market conditions and the progress achieved towards re-balancing of the oil market at that time."

"To support the extension of the mandate of the Joint Ministerial Monitoring Committee (JMMC) composed of Algeria, Kuwait, Venezuela, Saudi Arabia and two participating non-OPEC countries of the Russian Federation and Oman, chaired by Saudi Arabia, co-chaired by the Russian Federation, and assisted by the Joint Technical Committee at the OPEC Secretariat, to closely review the status of and conformity with the Declaration of Cooperation and report to the OPEC – non OPEC Conference."

Saudi minister Khalid Al-Falih

Initially, at the meeting a year ago, the oil ministers predicted that the glut would disappear within six months. Then at the May meeting, the Saudi minister predicted that the extension would "do the trick" of draining the glut "within six months."
Continue reading "OPEC Appeases Russia To Stick With Deals" →